Honorable Bevington Reed Opinion No. M-751 

Coordinating Board 

Texas College and Re: May Odessa College conUniversity System tract with a private corpoP. 0. Box 12788, Capitol Station ration, where a member 

Austin, Texas 78711 of its Board of Regents is 

a minority stockholder and 

President of such corporation, where the benefits 

derived from such contract 

are placed in a scholarship 

Dear Dr. Reed: fund? 

Your request for an opinion presents the following facts: 

“In approximately 1952, Del-Tex, Inc. placed vending 

machines on the campus of Odessa College. These 

machines were placed there with the permission of the 

College Administration. 

“The College requested, and Del-Tex, Inc. paid, 30% 

of the gross for cold drinks and 10% of the gross for 

candy and coffee sold into the General Fund of Odessa 

College. 

“There was no written contract entered into at that time, 

and there has been no subsequent written contract entered 

into. 

“In the early 1960’s, Del-Tex, Inc. no longer operated 

the vending machines, but the operation of Del-Tex was 

taken over by West Texas Vending, Inc. , which is partly 

owned by Del-Tex, Inc. 

“In 1960, the Board of Regents of Odessa College directed 

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Honorable Bevington Reed, page 2 (M-751) 

the Business Managrr of the College to deposit 

all sums received from the vending company into the Odessa College General Scholarship Fund 

rather than depositing it into the General Fund 

of the College. The administration of the College 

awards scholarship funds to worthy students from 

the proceeds it receives from the vending machine 

company. 

“In 1967, the President of Del-Tex, Inc., who owns 

no stock in Del-Tex, and receives no bonus from 

any sales made by Del-Tex, became a member of 

the Board of Regents. This same regent is President 

of West Texas Vending, Inc., and owns about 20% of 

the stock. 

“There are at this time three other vending machine 

companies which have vending machines on the campus 

of Odessa College. The companies owning the vending machines pay a percentage of their gross receipts 

into the same scholarship fund. None of the vending 

machine companies have written contracts, and it is 

the understanding between all of the vending machine 

companies and the College that they can be asked to 

take their machines from the campus at any time, or 

they may voluntarily take the machines from the campus 

at any time. 

“There is no restriction on the number of vending 

machine companies which are allowed to have machines 

on the campus. Any vending machine company can 

place machines on the campus merely by obtaining 

permission of the administration. It would be expected, 

however, that any vending machine company desiring 

to place vending machines on the campus would be required to pay a percentage af the proceeds into the 

Scholarship Fund. ” 

From the above stated set of facts we must determine if this is a 

contract entered into by Odessa Junior College, acting by and through its 

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Honorable Brvington Reed, page 3 (M-751) 

Board of Rcagcnts and West Texas Vending Machine Corrpany; and if so, 

would such contract be in violation of the public policy by reason of a 

member of the Board of Regents being a minority stockholder (20%) and 

President of West Texas Vending Machine Company. 

Even though the proceeds derived from the vending machines are 

used for a worthy purpose (Scholarship Fund), the Board of Regents has 

control of such funds as indicated in the facts submitted. 

It appears from the facts submitted that there is an express oral 

contract between Odessa College and West Texas Vending Machine Company in view of the fact that the college has authorized the vending machine companies to place their vending machines in the college buildings 

or on campus, for which locations the college receives 30% of the gross 

on cold drinks and 10% of the gross on candy and coffee from the vending 

machine companies. 

Black Law Dictionary, 4th Edition, defines an express contract 

as follows: 

“An express contract is an actual agreement of the 

parties, the terms of which are openly uttered in 

distinct and explicit language, either orally or in 

writing. 2 Bl. Comm. 443 and other authorities cited. ” 

From the cases cited, it is clear that a member of the Board of 

Regents is a public official. In the case of Schurz v. Telfer, 74 S. W. 2d 

327 (Tex. Civ. App. 1934, no writ) the Court held that a school trustee of 

a county common school district was a county officer. Also see Buchanan 

v. Graham, 81 S. W. 1237, 1239, (Ct. of App. 1904). 

The Legislature has not defined conflict of interest in the context 

of the facts presented. However, in Attorney General’s Opinion No. O-1589 

(1939) this office held: 

“It is well settled in Texas that if a public official 

directly or indirectly has a pecuniary interest in a 

contract, no matter how honest he may be, and although he may not be influenced by the interest, such 

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Honornblc Brvington Reed, page 4 (M-751) 

These authorities are determinative of our answer. This office 

has heretofore so considered this principle of law in Attorney General 

Opinion No. M-625 (1970). See also 43 Am. Jur. 107, Public Officers, 

Sec. 300, and cases cited. Until the Legislature sees fit to modify this 

common law principle, which Texas has adopted, a court is without 

authority to uphold the contract before us. 

SUMMARY 

Odessa College cannot lawfully enter into a 

contract with a vending machine company where a 

member of its Board of Regents is the President and 

a stockholder of the vending machine company, since 

this would be in violation of the public policy of the 

State of Texas forbidding public officials who have a 

pecuniary interest in a contract from contracting with 

entities in which they have a pecuniary interest. 

Yours very truly, 

Prepared by John H. Banks 

Assistant Attorney General 

APPROVED: 

OPINION COMMITTEE 

Kerns Taylor, Chairman 

W. E. All-n, Co -Chairman 

John Reese 

Dick Chote 

Harriet Burke 

Ed Esquivel 

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Honorable Bevington Reed, page 5 (M-751) 

Meade F. Griffin 

Staff Legal Assistant 

Alfred Walker 

Executive Assistant 

Nola White 

First Assistant 

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